In a Kabushiki Kaisha (KK), a shareholders’ meeting and at least one director are required corporate bodies. If a KK has two or more directors, it may establish a board of directors.

In a KK, the shareholders’ meeting decides fundamental matters, while the directors manage the company’s day-to-day operations. If the company has a board of directors, the board makes key business decisions, and the representative director executes those decisions. The board may delegate certain matters to individual directors. However, under the Companies Act, important matters—such as the disposal of significant assets or the transfer of substantial business operations—may not be delegated to individual directors.

The shareholders’ meeting appoints and dismisses directors. Representative directors are appointed and dismissed by a resolution of the board of directors.

A company with a board of directors must appoint a corporate auditor (or, in some cases, an audit and supervisory committee member). The corporate auditor audits the company’s financial statements and the performance of directors. However, the company may limit the scope of the auditor’s authority to accounting audits only by providing so in its articles of incorporation.